THREATS AND RESPONSES: DOMESTIC SECURITY

By TIMOTHY L. O'BRIEN with DON VAN NATTA JR.

Published: July 31, 2003

A Senate hearing today exploring Saudi financing of terrorism will focus on several Muslim charities that are closely linked to members of the Saudi royal family, groups that are also cited in classified sections of a Congressional report on the September 2001 hijackings, according to law enforcement officials and others with knowledge of the document.

These sources said that a prominent Saudi figure also mentioned in the report is Prince Nayef bin Abdel Aziz, Saudi Arabia's powerful interior minister and a brother of King Fahd. They said the report concludes that senior Saudi government officials helped finance terrorist groups through charitable organizations and individuals.

Since shortly after the attacks on the World Trade Center and the Pentagon, some Saudi charitable groups have been investigated by American and foreign law enforcement agencies. Several prominent Saudi officials and leaders of the groups have strongly denied that they finance terrorists and say these groups do legitimate humanitarian work.

Prince Nayef's responsibilities involve regulating Saudi charities, and for years he has denied that Saudi Arabia has been a benefactor of terrorism.

Among the Saudi charities that will be the focus of testimony before the Senate's Governmental Affairs Committee today are Al Haramain Charitable Foundation, the Muslim World League, the World Assembly of Muslim Youth and the International Islamic Relief Organization. All four of these charities have denied any links to terrorist activities. It is unclear if these groups are named in the deleted parts of the Congressional report.

The White House's refusal to make the edited parts public has strained Saudi-American relations and renewed scrutiny of terror financing. A Saudi Embassy spokesman in Washington did not return a phone call yesterday seeking comment on Prince Nayef or the charities named in the report.

Today's hearing will include testimony from Rick Newcomb, head of the Office of Foreign Assets Control at the Treasury Department, which administers economic and trade sanctions to further national security. Mr. Newcomb is expected to testify that former Vice President Al Gore arranged two meetings with Saudi officials, in 1999 and 2000, that threatened Saudi Arabia with severe sanctions if they did not staunch the flow of terrorist money from the country. The hearing is expected to explore why sanctions were not imposed even though federal officials believed Saudi Arabia continued to ignore the problem.

The hearings will delve into charges that Congressional staff members who worked on the report of the joint House and Senate intelligence committee investigating the 2001 attacks were pressured by the F.B.I. and the C.I.A. to classify information in the report about possible Saudi financial links to the attacks.

Al Haramain, which is based in Riyadh, has figured prominently in federal law enforcement investigations of Saudi sponsorship of terrorism for at least several years. It was banned from Kenya after the bombing of the American embassy there in 1998 because of law enforcement suspicions that it was involved in the attack. Last year, the Treasury Department froze assets of its Bosnian and Somali branches because of suspected links to terrorists, among them Wael Jalaidan, a Saudi Arabian identified as a terrorist sponsor in the report. In June, the Saudis said they would close all of Al Haramain's operations outside of Saudi Arabia because of concerns about lax financial controls and an abundance of non-Saudi employees in its foreign offices.

An American law enforcement official said that a continuing issue for the United States was whether Saudi Arabia was cooperating fully with the war on terrorism, another area that is addressed in the public and classified sections of the report. ''Cooperation has improved considerably since the Riyadh bombings'' on May 12, the official said, referring to the triple suicide bombings that struck western compounds in Riyadh. ''But it's still not perfect.''

For at least the last month, the Treasury Department and other federal agencies have been pressing Saudi officials to monitor closely bank accounts designated for relief aid to Palestinians, senior law enforcement officials said. The accounts in question are known in Saudi Arabia as '''Account 98'' funds -- the designation Saudi regulators use for money destined for Palestinian charitable works. Similar accounts exist for Saudi money intended for needy Muslims in other parts of the world, like Bosnia and Chechnya.

Prince Nayef oversees the Saudi Committee for the Support of Al Quds Intifada, which provides aid to the families of Palestinian suicide bombers through specially designated bank accounts. According to Arab News, a Saudi daily, a single telethon early last year raised about $112 million for Al Quds.